Brokerage CEO denies kickback scheme with Rocket

The Mitchell Group was going to settle accusations that it participated in an alleged kickback scheme with Rocket Homes by paying $200,000 to the Consumer Financial Protection Bureau. 

Doing so would make a potential headache go away. But the brokerage's CEO Jason Mitchell decided that since his company did nothing wrong, he would take his chances and try to prove that in court.

In a video address posted on Linkedin, Mitchell accused the CFPB of unleashing a "witch hunt" and cryptically hinted that the bureau was trying to get his brokerage to divvy out information that would make going after Rocket Companies easier.

"They want the big fish and they want the little fish to go against the big fish," Mitchell said. "I was close to [agreeing] just to be done with this….but I couldn't do it. The reality of the situation is that we did nothing wrong. I could have very easily been done with this thing and put it behind us, and I chose to fight because we're right." 

Mitchell added that he and the CFPB "have been going back and forth" for over three years regarding the allegations. And after the executive disagreed with the settlement proposal, litigation was filed by the bureau soon after.

The suit filed by the watchdog in Michigan accuses Rocket Homes, the real estate arm of Rocket Cos., of initiating a kickback scheme between itself and The Mitchell Group to boost origination business.

The watchdog claims Rocket Homes gave referrals and other incentives to brokerages under an agreement that they would refer business to Rocket Mortgage and Amrock, the megalender's title, closing and escrow company.

The Mitchell Group was an "enthusiastic partner" in the kickback scheme and allegedly referred thousands of clients to Rocket and Amrock. Some of these referrals were egged on by the promise that agents referring the most business to Rocket would receive a $250 gift card, the CFPB claims.

Rocket has also vehemently denied the allegations. In a statement, a company press person called the bureaus claims "false and a distortion of reality."

"Director [Rohit] Chopra's transparent ploy to bolster his political agenda before the changing of administrations is a reckless and shocking misuse of public resources," a press person for Rocket Cos. said.

The CFPB's lawsuit will have negligible impact on Rocket Cos., according to an investment banking firm.

A note from Keefe, Bruyette & Woods called Rocket Homes' mortgage revenue "incremental" and "de minimis" compared to the $79 billion in mortgage banking revenue Rocket Cos. generated in 2023.

"To the extent the company needs to change any business practices as a result of this lawsuit, the earnings impact is likely to be minimal," the note said.

The investment bank also suggests that CFPB Director Rohit Chopra will be removed from his position and that a new Trump term will see less enforcement actions, increasing the likelihood that the case will be tossed.